How much longer can David Cameron remain part of an EU that treats him this way?

Our relations with the EU may be about to change radically, irreversibly and positively. Last month, David Cameron refused the other governments recourse to the EU treaties in pursuit of their plan for fiscal integration. Now we have their response: they plan to ignore Britain’s veto and go ahead anyway.

On Friday night, the excellent Laura Kuenssberg revealed the latest draft of their proposed treaty. As predicted, other member states commit themselves to fold their accord into the full EU Treaties within five years, and to make use of EU mechanisms and procedures in the mean time.

I expected a storm in the Sunday papers. After all, denial of the use of EU institutions was not part of David Cameron’s veto; it was David Cameron’s veto. If the other states were pushing ahead regardless, then everything the British media and public had been applauding was false. Worse, the EU has now established the precedent that a sub-group of members can alter the treaties without the permission of all the signatories – surely an intolerable situation. So far, though, the only journalist to have grasped the implications is Rafael Behr at the Staggers:

This draft treaty sets up a framework and a timetable for the evolution of European economic policy as mediated by EU institutions that, if not substantially amended, all but guarantees Britain’s departure from the Union.

It's not over yet, of course. FCO mandarins will work furiously to resurrect the original trade-off – that is, permission to use EU institutions in exchange for some paltry and optical guarantee on financial services. Brussels placemen and pensioners in the House of Lords will argue that Britain should drop its objections and allow the treaty to go ahead. The Deputy Prime Minister, who no longer even pretends to care for his party’s interest as he auditions for a job at the European Commission, speaks of Britain joining the eurozone treaty.

In reality, though, the argument has now moved on to withdrawal – or, at the very least, to some form of EFTA-type associate membership. It is plainly impossible to remain part of an organisation which makes up the rules as it goes along. There is absolutely no legal base for a group of states, which happen to be EU members, to decree the use of EU structures. Merkozy and their allies are, however, relying on the European Court of Justice to do as it always does in these situations, namely to disregard what the law says in favour of what they'd like it to say.

We can see clearly what we had previously suspected: that the maiming of the City of London is not an unfortunate or even a neutral side-effect of the Brussels rules on financial services, but their primary purpose. Listen to the way Nicolas Sarkozy spoke of the Financial Transactions Tax yesterday. The only way for Britain to defend the two million jobs in that sector is through unilateral action. And that cannot happen under our existing membership terms.

The prime minister now accepts that he can’t rely on the EU to follow its own rules. He knows, too, that he is dealing with people who bear him no goodwill. It is surely only a matter of time before he draws the obvious conclusion.